Renting or buying: report points out six of the best

IN ONLY a handful of Melbourne suburbs is it cheaper to buy a home than to rent one.

Of Melbourne's 374 suburbs, in only six was it more affordable to buy than rent, and among Sydney's 625 suburbs, only 48 fit the bill.

But in other parts of the country the recent fall in interest rates and stable house prices has boosted the number of suburbs and country towns in which it is cheaper to buy than rent.

In October there were 388 localities and this month there were 494, according to RP Data's latest Buy vs. Rent report.

And if prospective home owners were willing to chip in another $50 a week, that number rose to 1726 localities, the report said.

A sharp rise in house prices over the past decade, coupled with slower rental growth, has resulted in far fewer suburbs in the largest capital cities being cheaper to buy in than rent, researcher Tim Lawless said.

''If you start factoring in your buying costs, stamp duty, conveyancing, pest and building inspections, it starts to make the equation look much less appealing,'' he said.

The analysis compared a suburb's median weekly rent over the past year with the cost of monthly repayments on a variable 30-year mortgage where the loan-to-value ratio was 90 per cent and interest rate 5.65 per cent.

It did not factor in other costs associated with buying a property or take into consideration capital gains over time. Brisbane had 58 suburbs where it was cheaper to buy than rent.